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Comparable Pricing: Separating Winners from Losers in the Marketplace

comparable pricing

The single most misunderstood component of appraisals is comparable pricing. It is not discussed in any featured manner or industry publications or presented at seminars or workshops. The lack of knowledge regarding the subject matter has led to more professional failures when appraising than any other single component. Conversely, comparable pricing is responsible for the successful appraiser and resultant work product.

It is the ultimate test of value.

There are rules in the marketplace regarding comparable pricing. This post does not suggest a thorough and complete understanding of this pricing. However, it does attempt to introduce key concepts, so that you may become proficient and successful in your appraisal work products and assignments.

The marketplace defines market value as the amount of money that a purchaser, willing, but not obligated, to purchase, would pay an owner willing, but not obligated, to sell. This is the cornerstone of marketplace activity when it comes to exchanging money for goods or services. It is the foundation upon which comparable pricing is based: Willing Buyer/Willing Seller.

The marketplace has established a 5-way test for market value:

  1. A fair sale from fair negotiations
  2. No compulsion of necessity
  3. Knowledge of all relevant facts
  4. No peculiar or special circumstances
  5. Reasonable time to find a buyer

Should you find yourself in the practice of Arboriculture, you will see that comparable pricing is the missing component of identifying the largest commonly available nursery-grown tree as published, or in this case not published, in the venerable 10th Edition.

The mastery of comparable pricing will enable you to attain a marketplace position previously unknown and elusive to you and your practice.

I do wish you well.

Read more about our Nursery and Tree Farm Appraisal Services

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